Change your mind, change your life podcast - How to be Rich Rich and Wealthy: the 90/10 Rule

In today's episode I want to coach on money, specifically The 90/10 rule.

If you are having the goal of increasing your earning power in 2018, then you need to understand the basics of money - Economics

The reason that 10% of the population earn 90% of the wealth in this country, is because the rich understand the fundamentals. They understand the fundamentals of money.

So, let's review

Money or currency, is anything used as a means of exchange.

Hence the rise of bitcoin and trading also called bartering.

Money circulates in the economy through the Federal Government.

The Federal government’s main customer is the U.S Treasury.

The Federal government collects tax payments and deposits into the US treasury.

The US treasury then pays the government’s bills e.g social security checks, interest payments on treasury bills and bonds and oversees the operations of the nation’s commercial banks.

But the main job of the Federal government is to establish U.S economic policy.

When the country is trending towards high inflation, the Federal government slows down the economy by selling securities, Bonds and Treasury notes. This removes cash from the market that would otherwise be available for lending.

In this way the Federal government slows borrowing, forcing interest rates up and cools the overheating economy.

On the flip side, if there isn't enough money in circulation or there is low inflation i.e. nobody is spending money; the Feds stimulate the economy by buying securities and printing more money. Thus, allowing more money to be available for lending.

Another tool the Fed has at its disposal is interest rates.

When the Feds increases the discount rates to the banks, the banks borrow less and thus have less cash to lend their customers.

The government borrows by selling securities. The more the government borrows, the higher the interest rates.

Understanding Inflation

Whenever prices rise because of the increased costs associated with production but production itself stays the same; inflation occurs.

Sometimes inflation can help create wealth, especially when investments increase in value faster than inflation rate, as can happen, in real estate.

One of the reasons for the real estate bust or meltdown of 2008 was because interest rates were rising, and everybody was trying to purchase homes before the interest rates go higher, driving up demand and prices!

When demand exceeds supply, prices rise; but when supply exceeds demand, prices fall.

Now that I have reviewed some fundamentals of economics let's get into our topic for today.

The 90/10 rule

The 90/10 or 80/20 rule states that 90% of your income will come from 10% of your customers or

That 90% of the wealth will be made by 10% of the population or

That 10% of any effort generates 90% of the results.

Today I want to talk to the Millennials.

As a young person starting out in life you should make the determination not to be in the 90% bucket. The 90% bucket is the people who choose comfort and security instead of being rich!

You must choose to be rich!

As a coach I would like to teach you how to be a part of the 10% bucket.

But, like any skill, it takes practice to get the desired results. It takes reading, learning and coaching.

The starting point is always the mind.

Have the intention to make more than enough.

Have the intention to be more than enough.

Decide today that you are going to have a quality life that allo...